Question Details

Which of the following is included in inventory costs 



1.	Computers For You is a retailer specializing in selling computers and related equipment. During 2011, Computers For You sells $200,000 of merchandise to Sandcastles, Inc. Computers For You incurs $24,000 of freight costs associated with these sales. Which of the following is true regarding how this $24,000 is treated on the financial statements?
a.	Computers For You will report the $24,000 as part of merchandise inventory on the statement of financial position.
b.	Sandcastles, Inc. will report the $24,000 as part of merchandise inventory on the statement of financial position.
c.	Computers For You will report the $24,000 as part of operating expenses on the income statement.
d.	Sandcastles, Inc. will report the $24,000 as an accounts receivable on the statement of financial position.

	2.	Which of the following is a product cost as it relates to inventory?
a.	Selling costs.
b.	Interest costs.
c.	Raw materials.
d.	Abnormal spoilage.

	3.	Which of the following is a period cost?
a.	Labor costs.
b.	Freight in.
c.	Production costs.
d.	Selling costs.

	4.	Which method may be used to record cash discounts a company receives for paying suppliers promptly?
a.	Net method.
b.	Gross method.
c.	Average method.
d.	a and b.

	5.	Which of the following is included in inventory costs ?
a.	Product costs.
b.	Period costs.
c.	Product and period costs.
d.	Neither product or period costs.
	



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